Andrew Cuomo Birthed Subprime Crisis--Or Maybe Not
The Village Voice's cover story this week slams Andrew Cuomo as a sort of bumbling godfather of the current subprime mortgage crisis that has done so much to damage the American economy and to ruin lives.
A summarizing paragraph from the long story by legendary investigative reporter Wayne Barrett:
Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.
Basically, according to the article, Mr. Cuomo, now New York State attorney general, drove efforts by HUD to increase minority homeownership. His agency encouraged this by encouraging subprime lending. The subprime lending eventually led to the subprime crisis several years after Mr. Cuomo left HUD when the Clinton administration ended.
That's it, really: A place-holder Cabinet secretary who left office six years before the crisis started breaking is responsible because he wanted to increase minority homeownership. The rate-slashing Fed, predatory lenders, securities rating agencies, media cheerleaders, etc.--they're largely off the hook because it all started with Mario Cuomo's boy and his good intentions.
We don't buy it. If anything, Mr. Cuomo's effects on what was to come were wholly unintentional. Note the very last sentence of The Voice's massive story:
He seems more comfortable at 50 in the state attorney general's office than he has ever appeared in his public life, but the country will be living with his HUD mistakes, ill- or well-intended, for a long time to come. [emphasis ours]
Check out this New York Times story from Tuesday by Abha Bhattarai on the origins of the current economic downturn. Two words: Green. Span.
16 Park Avenue
"On the corner of Park Avenue & 35th Street, in the heart of Murray Hill... " More details |
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LITTLE PINK SUBPRIME HOUSES
(to the melody of Pink Houses by
John Cougar Mellencamp)
Theres a black man with a black cat
Living in a redline neighbourhood
Hes got an interstate runnin through his front yard
You know, he thinks, negative equities good
And theres a woman in the kitchen cleanin up the evening slop
And he looks at her and says: hey darling, I think this interest rates over the top!
Chorus:
Oh but aint that america for you and me
Aint that america were somethin to see baby
Aint that america, home of the subprime disease
Little pink houses for you and me
Well theres a young man in a t-shirt
Listening to Greedspan shoot the breeze
Hes got a greasy hair, greasy smile
He says: lord, Lehman must be my destination
cuz they told me, when I was younger
Boy, youre gonna work in a wall street bank
But just like CDOs, those crazy old dreams
Just kinda came and went
Chorus:
Oh but aint that america for you and me
Aint that america were something to see baby
Aint that america, home of the SEC
Little pink houses for you and me
Well theres bankers and more brokers
What do they know know know
Go to work in some high rise
And vacation out at the Hamptons, oh no!
Ohhh yeah
And theres winners, and theres losers
But they aint no big deal
cuz the simple man baby pays for the thrills,
The pills and the bills that kill
Chorus:
Oh but aint that america for you and me
Aint that america were somethin to see baby
Aint that america, home of the riskless real estate dream
Little pink houses for you and me
Oh but aint that america for you and me
Aint that america were somethin to see baby
Aint that america, home of investment banker greed
Little pink houses for you and me
"His agency encouraged this by encouraging subprime lending." This it the heart of the problem. Not the fact that he "...drove efforts by HUD to increase minority homeownership." You miss the main point of the article. When you mess with the market, bad things happen. I guess it is not his fault because his 'intentions' were in the right place. Typical liberal.
Who would have thought the Village Voice was a better source for journalism than the Observer?!
This 'crisis' is largely caused by people getting high interest loans they can't pay back from people who know that they can't. This would be less likely to have happened if we would teach the Bible, since the Torah says to NOT charge excessive interest, or at least teach long-term thinking, giving loans to people without jobs is a quick road to losing money. If we would teach our young businness majors more about the stupidity of the tabacco companies(predatory companies WILL ALWAYS fail eentually) and less about the 'crimes of the west', then we might not be hear. But, hear we are, so how do we get out? We have gotten out of financial crunches repeatedly and the Great Depression is not the best model (when workers waste time waiting for construction workers to fall from the job so that they can take their spot on the job, rather than finding a way to make money)the time tested method to end economic depression was, before Hoover and FDR, to do nothing with the government, except maybe to lower taxes across the board. Since the economy at its most basic fundamentals is 'people trading goods and services' the best move on the governments part is to everything it can to encourage trade. Two major ways that the government can help are already being done, a standard currency is available also there is generally peace and a reasonably amount of order. Anything else gets in the way, including heavy taxes and environmental regulations. We started out with a "Lassez-faire" system in this country, maybe we should return to it?
Tom you are dead wrong! Cuomo Was HUD Sec fro Bill C and CSpan has film of him pushing into law the subprime mess!
I must admit I am a long time critic of the Clintons and anyone associated with them. Andrew Cuomo was one of their favorites. I shudder at the thought of Billary at the State Department, but suddenly, I shudder at the thought of Cuomo not being my Attorney General. I hope that Billary as Secretary of State is just a vicious rumor to sell papers, but I know that HUD historical facts are not rumors. Andrew Cuomo was a mess at HUD and is part of the Clinton tragedy filled with promises, but little to no substance. It was an administration built on tech stocks, fast food franchise explosion, internet invention and initiative with little in tangible assets and truckloads of junk bonds. This ideology was part and parcel of the perception of a national surplus and certainly a chunk of the current fiscal crisis that had roots in the "Voodoo Economics" of Reagan, continued ironically by Bush 41 (since he was the first to coin the truth of it) and brought to its full disasterous results by Bush 43. Let me not vent too far however, for what Cuomo supported then and later, that had me say years ago, "Andrew is no Mario" is also worthy of the belated praise by The Voice for the younger Cuomo, that I share. I must take back my words that "his career is dead," for he has surfaced with public servant energy unmatched by any other politician in the nation save Barack Obama, Mike Bloomberg, Dennis Kucinich and a handfull of others. Perhaps he wants to make amends. Eliminating bonuses for the already greedy and rich failure executives feasting on taxpayer bailout dollars scores well on my scorecard. Andrew is no Mario. He does not have the silver tongue, but lately he is coming up with something more useful--protection of the public interest that lies first with the middle and working class. The article is valid, but redemption is even more so.